Question

Joshua inherited an annuity worth $3,362.56 from his uncle. the annuity will pay him three equal payments of $1,400 at the end of each year. the annuity fund is offering a return of:________

Answer 1

The annuity fund is offering a return of: 12.00%

What is an annuity?

An annuity is an investment that pays a fixed periodic amount to be the beneficiary of the investment, in this case, Joshua is entitled to three equal payments of $1,400 each year by investing $3,362.56 today.

The return on the annuity fund can be determined using a financial calculator which requires that the calculator be set to its end mode because annual payments would occur at the end of each year.

N=3(number of annual payments required by the annuity)

PMT=1400(annual payment which is $1,400 per year)

PV=-3362.56( the initial amount that must be in the account so as to be able to withdraw $1,400 per year for 3 years)

FV=0(this is future value which is not applicable because we need to invest an amount today, present value, to be entitled to annual cash inflow, not that we expect a lump sum at the end of the investment)

CPT(press compute)

I/Y=12.00%

Find out more about annuity on:brainly.com/question/14000207

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